Kingsport nursing home contests audit that says it must repay $85,000

According to an audit report from the Tennessee Comptroller's Office, The Wexford House in Kingsport must repay more than $85,000 to residents, insurance companies and the government. The audit says the nursing home had reported -- and been compensated for -- expenses that were non allowable through Medicaid, and charged residents for haircuts that were supposed to be free.

In response to a news report on the audit, Chief Financial Officer for Wexford House, John West, sent an e-mail to the Times-News on Thursday morning. He did not return calls for comment earlier in the week.

In his Thursday correspondence, West says RHA Health Services, which operates the nursing home, is appealing "some of the specific findings" in the audit.

The state identified $33,419 of non-allowable expenses in Wexford House's cost report. West says the majority of these costs pertain to depreciation of building assets which would be allowable on future Medicaid cost reports.

"The Comptrollers office believed that the life of certain assets would be longer than that chosen by our accountants and their adjustment just moved these expenses into future years," West writes.

"The remainder of the 'non allowable' expenses are valid business expenses associated with operating the facility (including meals with resident family members and employee recognition dinners and other business related reasons) but ones that the auditors did not feel related directly to resident care."

The state audit says non-allowable expenses reported to Medicaid from Wexford House included unexplained travel expenses, meal purchases and alcoholic beverages.

"While some alcohol was purchased at dinners with a family member or with business associates, it was only incidental and minor in relation to these expenses," West responded.

In regards to billing residents for hair cuts and shaves that were supposed to be free, West writes, "Billing for such services is in fact allowed by Medicaid regulations, but the auditors did not believe we had offered a free alternative to licensed beautician services....We are now offering our Medicaid residents a choice to have their hair cut by a licensed beautician for a fee or have their hair cut by a nurse’s aide free of charge."

Auditors found the accounts of deceased and discharged Wexford House residents were not properly managed and promptly refunded. According to the state report, Wexford House failed to refund $36,192.39 to Tennessee Medicaid, $25,643.13 to Medicare, $7,239.63 to former residents or their families and $4,703.79 to insurance providers.

West says the Wexford house has hired additional staff to reconcile these problems.

"The majority of the credits identified have been researched and either refunded or applied to the correct account," West writes.

"The $73,778 of credit balances identified in the audit report resulted from multiple years of operations approaching $50 million of billings. Taken into context, this is less than one tenth of one percent of our billings and means we had properly accounted for 99.9% of our payments before the audit occurred."